An extremist, not a fanatic

January 10, 2008

Citizens' income and immigration

In a comment here, Rohan asks how I reconcile my support for a citizens’ income with support for free migration. He’s echoing Milton Friedman’s claim that “You cannot simultaneously have free immigration and a welfare state.”The reason for this is simple. If you pay generous benefits to all comers, so many will come that we won’t be able to afford it.But this is why I put the “citizens” into citizens’ income - to stress that the payment should only be to British citizens. Immigrants, whilst having full freedom to enter the UK, and other rights (say to other benefits, conditional upon paying tax), wouldn’t be entitled to it unless they become citizens. Immigrants would then be like Athenian metics, though with more rights.Is such a two-tier arrangement cruel? It’s certainly more humane than this, so supporters of current arrangements can’t complain.And in one sense, such a scheme actually makes free migration more feasible. If people realize that immigrants can’t get generous benefits, they’ll have less reason to oppose their coming.Another question - though again not one that troubles supporters of our existing system - is: why should any piece of trash born in Britain get higher benefits than those unlucky enough to be born elsewhere?A possible answer to this comes from Herbert Simon. 90% of the income of Britons is the result merely of being British. We are richer than, say, Nigerians because we have a lot of inherited social capital that they don’t have. It’s reasonable to share this capital among ourselves. It is also reasonable (more so, I suspect) to recognize that this difference between the present generation of Britons and Nigerians is mere luck, and should be pooled through global redistribution. But it‘s not obvious why a Nigerian should get more welfare benefits simply by moving from Nigeria to Britain; he is, of course, getting more opportunities for earned income. Now, I’m not mega-happy with this answer myself; it’s a rough solution to some awkward issues. But it’s inadequate relative to an ideal position, but surely better than our present one.

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OK, but if you believe that economic immigrants will enter the UK on the basis of expected wages, how low would the probability of finding employment in the UK have to be before the expected wage falls to a level where, for example, a Nigerian would no longer wish to immigrate to the UK and some sort of equilibrium is achieved? (I'm thinking along the lines of a Harris Todaro model - I was going to link to Wiki but the page is rubbish)

For the sake of arguments, and making tons of simplifications, let's say half of immigrants would have to fail to find employment before net immigration flows hits zero. By that point there would be a very large number of unemployed immigrants in the UK, not receiving any benefits under your system. What consequences would that have, and is it likely to be politically feasible?

You'd need to have a pretty draconian system of deporting criminals, for a start - even quite petty ones, which is going to catch a lot of kids who've been here since they were four and find themselves being sent to Somalia without speaking the language.

Since you can't allow deportees back in, you'd also need to keep and probably strengthen current controls at the borders and make sure that anyone who's been deported gets sent straight back.

Luis Enrique
The level of wages is relevant only after living costs have been subtracted. And with a guaranteed minimum income for citizens (remember!), the cost of living won't necessarily fall as unskilled wages fall. There may be a certain amount of money illusion (and a better international financial system would help with that) but after a while experience would feed back to the source countries. Being extremely poor in a warm country is probably preferable to being extemely poor in a cold one.

The second point about how to treat criminals is perhaps the more telling. One way around the story above is go into crime, especially if jail is a more secure existance than could be found at home. Ex-patriotriation of criminals would seem to be at least a political necessity.

Well, I said I was simplifying: replace the phrase expected wage in my above post with expected real wage, to account for living costs.

The point remains that the set of policies Chris describes - is likely to result in a very large increase in net immigration, and immigration will stabilise once conditions for immigrants have worsened to a point where residents of poor countries no longer want to immigrate.

Perhaps it is preferable to be extremely poor in a warm country than a rich one, all things being equal, but things are not equal: in the UK an extremely poor immigrant would have the chance of obtaining a job that would deliver a dramatically higher standard of living and the possibility of sending money back home. Hence a very large population of unemployed immigrants may be sustained in equilibrium (or put another way, will be necessary in order to achieve equilibrium).

So I think we'd end up with a very large number of unemployed immigrants in the UK. Do you think it's going to be OK just to let them starve, on the basis that that's "the deal"? We'd either have to introduce welfare for them, so Chris' answer of no benefits to non-tax paying immigrants is contradicted, or perhaps we'd see a sort of shanty town economy develop (that the Harris Todaro model is used to explain) which I don't think would be politically feasible.

In isolation I like the ideas of free immigration and CBI very much - I'm just not so sure Chris has dealt with Milton's objection convincingly.

Luis Enrique and John B have nailed the major hole in combining the CBI with free immigration, but in addition there is three other problems.

1. Free immigration would bid down wages throughout the economy (and especially in the low skilled sector). This would disencentivise work for those on the CBI. A population of indolent native proles would no doubt destabilise society.

2. A large increase in the population as the result of free immigation would strain public infrastructure. Immigrants still use parks, pavements, public transport etc even when they are not on welfare. Too remedy this taxes would either go up (to pay for the new infrastructure) or quality of life would go down (as the infrastructure runs down). Any increase in tax would further disincentivise work for those on the CBI.

3. A large increase in population would reduce trust and public institutions. Research shows homogenous societies have much higher trust, better institutions etc. A free immigration society would be very heterogenous.

In short a CBI is a great idea but would only work if the CBI was low and combined with selective and strict immigration controls.

"It is also reasonable (more so, I suspect) to recognize that this difference between the present generation of Britons and Nigerians is mere luck, and should be pooled through global redistribution."

I'm sorry but that's bollocks - we are richer because we embraced science and exploited resources. It's nothing to do with luck, if it were you would expect wealthy countries to be randomely distributed around the globe and they aren't. If you feel that sorry for them, "pool" your own wealth.

It's not luck, it's natural selection. My forebearers, none of whom were English BTW, maximised my chances of survival through their own efforts, and as a consequence gave me an advantage over people whose forebearers didn't do that.
My last comment was a bit harsh on reflection, I'm not saying less fortunate people aren't deserving of some help.

Some interesting comments but to turn to Chris' arguement can I ask some questions:

1. what is the test of being a citizen?
2. How do you define tax paying? Are you suggesting it is legal or fair to not pay benefits to EU citizens and asylum seekers on the basis that they're not citizens no matter what?
3. will the benefits for non-citizen's (who pay tax) be more or less than the CBI?
4. Doesn't having a GB wider benefits system for non-citizens mean you will need a similar system of bureaucracy and complex rules as now?
5. How will you effectively police emigration of citizens to ensure there is not massive overpayment of CBI? Won't this require a huge organisation (more bureaucracy) to track the whole adult population?
6. Or alternatively do you intend to pay CBI to citizens (both of working age and retirement age) who move abroad?
7. How is a CBI for citizens, and a differentiated benefits system for immigrants from France (i.e. in the EU) compatable with EU agreements on payments of benefits to EU citizens (excluing some accession countries) and European Law?
8. Would you pull out of the EU or propose an EU CBI if the issues raised were insummoutable?

I too was attracted to the CBI initially but there are a lot of questions unanswered and Chris' post just raises more especially about the treatment of non-citizens.

Shawfactor: your points seem to apply against immigration under any benefit system, not just the CBI.
Rohan: these are good questions. But are they really knockdown points against the principle of the CBI, or matters of administrative detail that need to be worked out? I know this sounds like ducking the issue, but I think it's premature to lay out precise administrative blueprints, when so few are even considering the possibility of a CBI yet.

Chris - When dealing with the benefits system I think administrative detail (i.e. being able to achieve what you intend) is as importatant as the wider economic effects - just look at tax credits for proof of that.

I know you've written strongly about the limits of vast organisations but it would seem to me you've missed a trick here by assuming that creating a database of every person older than 16 in GB (or having lived in GB) with additional information to allow automatic citizen/non-citizen status is achievable! And linking that to information on emigration isn't going to happen.

The complexities I've pointed out mean that there would need to a bureaucracy even bigger than now to even have a hope in hell of avoiding tax credits style overpayments running into many the billions.

I'd also suggest that needing to pull out of the EU to achieve the policy is slightly more than an admin detail.

In response to your last point - the work and pensions select committee did receive evidence on the CBI. Their report on the benefits system suggested a single working age benefit (with top ups for disability/housing etc) which is a different model to the CBI which could in theory produce simplification in the system. And you'd be surprised about how many people in the DWP are fully aware and have read the literature on CBI and come up lists of questions not entirely unlike mine. The frustration for those policy advisers is the reluctance of the proponents of the CBI to engage and begin to articulate an appliable policy. If CBI proponents want any traction in GB Government they have to answer the questions.

I'll keep watching your blog - please shout if someone in the field does engage.

Planeshift: 2nd Gen, born here but parents weren't. Contrary to popular (liberal) opinion being a migrant does not automatically make you more accomodating of subsequent migration waves. In the same way that people who make it to the middle class often appear to want to kick the ladder away for subsequent generations (e.g tha abolition of grammar schools), sucesfull migrants are often more anti migration than the indiginous population.

No offence Matt, but judging by your spelling the middle-classes abolished the grammar school system before you got to school! ;-) (just kidding) Either that, or the comprehensive system is not as bad as everyone makes out.

This grossly simplistic piece doesn't take into consideration the effect of welfare-hungry migrants on the indigenous taxpayer, who may then be tempted to emigrate to a less generous country. Speaking as one such emigrant, I have contributed far more tax to my adopted country than I have received, which is what you expect when your immigration policy is biased towards skilled, educated people who are already attuned to your culture. It's not rocket science.

And yes, provided they are spent wisely, such as on education and training, I'd much rather my taxes were spent on indigenous "trash" than deserving foreigners. Blood is thicker than water.

MM
"It's nothing to do with luck, if it were you would expect wealthy countries to be randomely (sic) distributed around the globe and they aren't."

Well no not necessarily. Depends on your model doesn't it. With accumulated capital and immitation effects with near neighbours, there is no necessary reason why a purely fortuitous development would not be geographically concentrated.

"It's not luck, it's natural selection. My forebearers, none of whom were English BTW, maximised my chances of survival through their own efforts, and as a consequence gave me an advantage over people whose forebearers didn't do that."

ALL people now alive can say that! In fact everyone of your ancestors (back to your single cell forbears) sucessful recreated. Isn't that amazing!

Yes in a hard darwinian sense we are all products of fitness..... But some of our ancestors passed on a more adaptive combination of genes, in the form of increased intelligence potential, resistance to disease, physical stength and the rest, and throught appropriate stimulation and education enabled their offspring to better exploit the environment.
Unfortunately welfarism is reversing this natural strengthening of the human race by encouraging the feckless, the stupid and the unproductive to breed like rabbits.